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Venezuela is heading for inflation of one million percent by the end of this year, according to the International Monetary Fund (IMF). The development in the South American country is comparable to the decline in prices in the Weimar Republic in Germany in the crisis of 1923, said the IMF in a perspective for the countries of Latin America.
The April IMF forecast for the socialist state was still based on inflation of 13,000 percent by the end of the year. Already at the time, the author of the report, IMF badyst Alejandro Werner, called the Venezuelan crisis one of the most important in the history of the country. modern economy.
In this report, the IMF estimates that the government led by President Nicolás Maduro will continue to finance budget deficits by increasing the amount of spending. This should further accelerate inflation.
He also predicted an 18% drop in gross domestic product in 2018. In April, 15 percent was out. One reason for this is a significant drop in oil production in Venezuela.
Developments in Venezuela evoke memories of hyperinflation in Germany, according to Werner. After the lost World War I (1914-1918), the alternating governments of the Weimar Republic financed the costs of the war effort through debt and an increased circulation of paper money. At the end of the war, Reich had a debt of 150 billion marks. Instead of acting in tax terms, governments had printed banknotes. A liter of milk soon cost up to 26 billion marks, a 105 billion loaf.
Due to mismanagement, corruption and relatively low oil prices, socialist Venezuela has suffered for years from a severe economic and supply crisis. Although there are the largest oil reserves in the world, more and more people are dying of hunger. There is a lack of foreign currency to import food and necessities.
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